If India exports goods worth 20 crore and imports goods worth 30 crore, it will have a _________.

1. surplus of ₹ 10 crore in balance of trade.
2. deficit of ₹ 10 crore in balance of trade.
3. deficit of ₹ 50 crore in balance of trade.
4. can't say.

_______ is the rate which is determined by market forces.

1. Fixed exchange rate
2. Real exchange rate
3. Flexible exchange rate
4. Nominal exchange rate

Current account of BOP records transactions is relating to ______.

1. exchange of goods.
2. exchange of services.
3. unilateral transfers.
4. all of them.

Which one of the following statements deals with debts and claims of a country?

1. Balance of capital account.
2. Balance of trade account.
3. Balance of current account.
4. Balance of services.

________ is a systematic record of all the economic transactions between one country and rest of the world.

1. Balance of trade.
2. Balance of transactions.
3. Budget.
4. Balance of payments.

Which is not a part of income receipts and payments from/to abroad in BoP account?

1. Profits.
2. Grants.
3. Interest.
4. Dividends.

Which of the following international agency manage foreign exchange rate system in the world?

1. Central Bank.
2. IMF.
3. World Bank.
4. All of these.

Which is not a feature of Balance of Payments (BOP) Account?

1. It includes economic transactions.
2. It has given period of time.
3. It records only capital transactions.
4. Trade between resident of a country and rest of the world.

Government transactions include _______ to keep the BOP in balance and which are not carried out for profits.

1. borrowings from IMF and other financial institutions
2. grants and donations
3. foreign exchange reserve
4. Both (a) and (C)

Unfavorable disequilibrium in BoP occurs when there is:

1. Balance of trade deficit.
2. Total exports are more than total imports.
3. Total imports are more than total exports.
4. Exports of goods and services are less than imports of goods and services.

Current transactions are of _______ nature.

1. flow.
2. stock.
3. both flow and stock.
4. none of the above.

Foreign exchange is demanded by _______.

1. domestic residents to purchase goods and services from other countries.
2. sending gifts and grants to foreign countries (abroad).
3. the domestic residents to purchase financial assets in a particular country.
4. all of them.

Which function of foreign exchange market protects against the foreign exchange risk?

1. Credit function.
2. Hedging function.
3. Transfer function.
4. All of them.

Reduction in the value of domestic currency through market forces is called ________.

1. depreciation.
2. devaluation.
3. revaluation.
4. appreciation.

In case of currency appreciation, the domestic currency becomes _______.

1. less valuable.
2. more valuable.
3. rise.
4. fall.

Which exchange rate measures the average relative strength of a given currency with respect to other currencies without eliminating the effect of change in price?

1. Nominal exchange rate.
2. Nominal effective exchange rate.
3. Real exchange rate.
4. Real effective exchange rate.

Buyers and sellers of foreign exchange are _______.

1. central banks.
2. commercial banks.
3. brokers.
4. all of them.

If the price of 1 USS has fallen from ₹ 56 to ₹ 52, the Indian currency has:

1. Depreciated.
2. Appreciated.
3. Devalued.
4. None.

Which one of the following items is an intangible item in balance of payments statement?

1. Export of food grains.
2. Import of crude oil.
3. Banking services provided in other countries.
4. Import of steel by steel industry.

Reduction in the value of domestic currency by the government is called ______.

1. depreciation.
2. revaluation.
3. devaluation.
4. appreciation.

Which items in Balance of Payments are also called 'above the line' items?

1. Autonomous items.
2. Accommodating items.
3. Visible items.
4. Invisible items.

_______ is a situation when 'managed floating' is exercised by the Central Bank.

1. Crawling peg
2. Spot market
3. Dirty floating
4. None of these

What is the difference between the value of exports and value of imports of goods called?

1. Balance of Payments.
2. Foreign exchange.
3. Balance of Trade.
4. Disequilibrium.

Capital account may be _______.

1. private capital.
2. banking capital.
3. official capital.
4. all of them.

Name the economic transactions which are undertaken to make equilibrium in balance of payment,

1. Autonomous items.
2. Accommodating items.
3. Invisible items.
4. None of them.

Unilateral transfers are a part of:

1. Capital Account.
2. Current Account.
3. Balance of Trade Account.
4. Balance of Payment Account and Current Account.

What will be the effect of appreciation of domestic currency?

1. Imports will fall and exports will rise.
2. Both exports and imports will fall.
3. Imports will rise and exports will fall.
4. Both exports and imports will rise.

Which items are excluded in BoT, but included in BOP?

1. Visible items.
2. Invisible items.
3. Private capital.
4. Both (b) and (c).

Increase in the value of domestic currency by the government is called _______.

1. depreciation.
2. devaluation.
3. revaluation.
4. appreciation.

Giving reason, state whether the following statement are true or false.
In balance of payments, repayment of loans by Indian Government to American Government will be reflected as debit item.

Current account is a part of balance of trade. (True/ False)

Supply of foreign exchange is positively related to the price of foreign exchange. (True/ False)

When in order to buy 1 US dollar ₹ 65 are needed instead of ₹ 60 earlier, domestic currency shows appreciation. (True/ False)

Are the following statement true or false? Give reason.
An increase in demand for imported goods raises the supply for foreign exchange.

Giving reason, state whether the following statement are true or false.
Accommodating items are also known as 'above the line' items.

Giving reasons, state whether the following statements are true or false:
Appreciation of domestic currency discourages imports.

Giving reason, state whether the following statement are true or false.
Autonomous transactions take place in current account only.

Are the following statement true or false? Give reason.
In spot market sale and purchase of foreign currency is settled on a specified future date.

Giving reasons, state whether the following statements are true or false:A fall in the price of 1 US dollar from ₹ 50 to ₹ 40 means depreciation of the Indian currency.

Are the following statement true or false? Give reason.Appreciation of domestic currency leads to rise in imports.

Giving reasons, state whether the following statements are true or false:
Both depreciation and devaluation of domestic currency have the same meaning.

Accommodating items do not cause any movement of goods and services across the borders. (True/ False)

Giving reason, state whether the following statement are true or false.
Borrowing by government from World Bank to finance the BOP deficit will be recorded in the capital account.

Are the following statement true or false? Give reason.
Revaluation and appreciation of currency are one and the same thing.

Giving reason, state whether the following statement are true or false.
Accommodating items of trade are undertaken in order to maintain the balance in the BOP account.

Giving reasons, state whether the following statements are true or false:
Depreciation of domestic currency encourages exports.

Giving reason, state whether the following statement are true or false.
Foreign exchange received on account of export of sugar will be recorded in current account.

Balance of trade is the difference between export of services and import of services of a country. (True/ False)

Giving reason, state whether the following statement are true or false.
Unilateral transfers received from abroad will be recorded as a credit item of BOP on current account.

Decrease in demand for foreign currency leads to currency depreciation. (True/ False)

Fill in the blank with the correct answer.
________ is one of the most important sources of demand for foreign currency.

_________ is defined as the net difference between export and import of goods.

_________ refers to those international economic transactions which take place due to some economic motive.

Currency _______ means decrease in the value of domestic currency in terms of foreign currency.

BoP account reflects the growth potential of the economy. (True/ False)

A balance of payment transaction undertaken to cover deficit or surplus in autonomous transactions are called_________.

______ always balance in accounting sense.

_______ includes net receipt obtain from the sale of share in public sector undertakings.

What is ‘managed floating exchange rate’?

What is floating exchange rate?

Define foreign exchange rate.

What is foreign exchange?

State two sources of demand for foreign exchange.

What is fixed exchange rate system?

What is the difference between the values of exports of goods and imports of goods called.

List two items of the capital account of balance of payments account.

When will balance of trade show a surplus?

What is meant by trade deficit?

What is 'devaluation'?

Give the meaning of balance of payments.

What is 'current account deficit' in the balance of payments?

Give meaning of balance of trade.

How can increase in foreign direct investment affect the price of foreign exchange?

Give meaning of managed floating exchange rate.

State two sources of supply of foreign exchange.

Define flexible exchange rate system.

Name the items included in balance of trade account.

What does balance of payments account of a country record?

When will balance of trade show a deficit?

Define ‘Trade Surplus’.

Define Balance of Payments on capital account.

If the value of export of goods of a country is ₹ 1,000 crores and the value of import of goods is ₹ 1,200 crores, how much will be the trade balance (or balance of trade)?

Ten US dollars are exchanged for five hundred Indian rupees. What is the exchange for Indian currency?

Give the meaning of equilibrium foreign exchange rate.

A country's balance of trade is ₹ 100 crores and value of export of goods is ₹ 175 crores. Find out value of import of goods.

Define pegging operations.

Why are imports entered as negative items in the balance of payments account?

Distinguish between current account and capital account of balance of payments account.

Name two sources of supply of foreign exchange.

Define Balance of Payments on current account.

Why did India devalue its currency in 1991?

Should a current account deficit be a cause for alarm? Explain.

If inflation is higher in country A than in Country B, and the exchange rate between the two countries is fixed, what is likely to happen to the trade balance between the two countries?

Total receipts and total payments of Balance of Payments statements are always equal. Do you agree?

Do you think that a rise in BPO services a good source of supply of foreign currency?

What do we mean by surplus in BoP?

What is the main feature of the fixed exchange rate system?

Give two examples of services included in Balance of Payment account.OR
Name two invisible items of the BoP Alc.